# EUR-Lex - 52013DC0762 - EN

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# 52013DC0762

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Implementing the Energy Efficiency Directive – Commission Guidance /* COM/2013/0762 final */**

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COMMUNICATION FROM THE COMMISSION TO
THE EUROPEAN PARLIAMENT AND THE COUNCIL

Implementing the Energy Efficiency
Directive – Commission Guidance

1.           Introduction

Europe cannot
afford to waste energy. Achieving an energy efficient Europe has been an EU goal
for a long time, repeatedly supported by the Heads of State and Governments of
the EU.

In 2007 the European Council adopted
ambitious energy and climate change objectives for 2020 – to reduce greenhouse
gas emissions by 20%, to increase the share of renewable energy to 20% and to reach
20% energy efficiency[1].

These targets were reconfirmed in the Europe
2020 Strategy[2],
which is shared among the European institutions, the Member States and the
social partners, all of whom have a part to play in making sure the EU takes
the necessary actions to reach the Europe 2020 targets.

Forecasts in 2010[3] showed that the EU energy
efficiency 2020 target would not be met and that therefore new measures were
needed at European and national level. To tackle this situation the Commission
put forward a proposal for an Energy Efficiency Directive in 2011. The proposal
built on the experience gained in various areas, notably on the energy
performance of buildings, on energy services and on cogeneration. The common
denominator of these areas is the still existing great potential for energy
efficiency, thus the proposal started from the basis that the majority of the energy
savings required could be reached through energy efficiency improvements (i.e.
using less energy input for an equivalent level of economic activity or
service). The overall aim of the proposal was to make a significant
contribution to meeting the EU's 2020 energy efficiency target as well as to
set a common framework to promote energy efficiency in the Union beyond 2020.
That proposal was eventually adopted by the two co-legislators on 25 October
2012 as the Energy Efficiency Directive 2012/27/EU[4].

2.           The Energy Efficiency
Directive

The Energy Efficiency Directive (the
"EED") was published in the Official Journal on 14 November 2012, and
entered enter into force on 4 December 2012. Member States will have to
transpose it by 5 June 2014 (apart from certain provisions for which a
different transposition date is foreseen[5]).

The EED puts forward legally binding measures
to step up Member States’ efforts to use energy more efficiently at all stages
of the energy chain – from the transformation of energy and its distribution to
its final consumption. The most important requirements of the Directive, in
terms of future energy policy, are set out briefly below.

First, in order to reinforce the political
commitment made by the Member States in the EU 2020 Strategy the EED clearly
defines and quantifies for the first time the EU energy efficiency target as
the ''Union's 2020 energy consumption of no more than 1 474 Mtoe[6] primary energy or no more
than 1 078 Mtoe of final energy''[7].
With the accession of Croatia on 1 July 2013, these targets have been adjusted
to ''no more than 1 483 Mtoe primary energy or no more than 1 086 Mtoe of final
energy''.

The full and proper implementation of the
EED will play an important part in achieving the EU 2020 20% energy efficiency target
which in turn will feed into the EU 2030 framework for climate and energy
policies, as explained in the Green Paper COM (2013) 169 final. The assessment
of progress towards the indicative national energy efficiency targets set by
the Member States in accordance with Article 3 of the EED will contribute to
the discussion about what types of target and at what level might be
appropriate for 2030.

The EED also requires the Member States to set national indicative energy
efficiency targets for 2020, which can be based on different indicators
(primary or final energy consumption, or primary or final energy savings, or
energy intensity). Member States had to notify these targets and how they
translate in terms of primary and final energy use in 2020 to the Commission by
30 April 2013 either as part of the National Reform Programmes or in a separate
communication[8].

This information has been fed into the
European Semester process[9],
and is being evaluated as an element in assessing the likely achievement of the
overall EU target by 2020 and the extent to which the individual efforts meet
the common goal. All Member States have now notified their national indicative
targets, although two have not yet reported them in the format required by the
Directive. The national indicative energy efficiency targets, taken
collectively, suggest that the Member States aim to achieve only about 16.4%
primary energy savings and 17.7% final energy savings by 2020 – not the full
20% needed to meet the EU's overall target.[10].
However, a more in-depth evaluation comprising the targets of all Member
States, energy model results and the inclusion of further policy instruments currently
being developed will need to be undertaken before a more reliable result can be
given. In accordance with Article 3(2) and Article 24(7) of the EED, the
Commission must submit its assessment of progress achieved towards the 2020
energy efficiency target to the European Parliament and Council by 30 June 2014.

Moreover, the Directive requires Member
States to establish and publish by 30 April 2014 their long term strategies for
building renovation, a crucial obligation given that nearly 40% of final energy
consumption is in houses, public and private offices, shops and other
buildings. Public sector buildings must lead by example – 3% of buildings owned
and occupied by central governments should be renovated each year to the level
the Member State has set under the Energy Performance of Buildings Directive[11]. The leading role of the
public sector is also recognised in the provisions of the EED on public
procurement, with central government required, under certain conditions, to
purchase the most energy efficient products, services and buildings.

Member States must ensure that a certain
amount of energy savings are realised over the 2014-2020 period at end-user
level by establishing either an energy efficiency obligation scheme or
alternative policy measures.

Recognising the significant energy savings
potential in enterprises of all categories and types, all enterprises are
encouraged to have energy audits, and this is compulsory every four years for
those which are not SMEs. Member States are requested to develop programmes to
encourage SMEs to undergo energy audits and to raise awareness among households
about the benefits of such audits. Through the identification of energy saving
possibilities, energy audits will also be the basis for the development of a
market for energy services.

Information on energy consumption is
crucial if consumers are to make informed decisions about energy supply and
use. The Directive therefore contains detailed requirements on metering and
billing for final customers.

About 30% of the EU's primary energy is used
by the energy sector, mainly for transforming energy into electricity and heat
and for distribution. The Directive therefore aims to maximise grid and
infrastructure efficiency and to enable and promote demand response and sets in
place obligations and encouragement for the greater use of high-efficiency
cogeneration and district heating and cooling.

Energy efficiency is one of the most cost
effective ways to enhance security of energy supply, and to reduce emissions of
greenhouse gases and other pollutants. The energy system and society as a whole
need to become significantly more energy efficient. Improving energy efficiency
is a priority in all decarbonisation scenarios presented in the Energy Roadmap
2050 and therefore the prime focus should remain on energy efficiency also in
this context.

An analysis of trends in key indicators suggests
that, with strong energy efficiency policies and full implementation of the
EED, the EU could get on track for meeting its target in 2020. If that is
achieved, annually up to 2020, European households and industries energy costs
would be some €38 billion lower, the need for investment in energy generation
and distribution would be around €6 billion lower and there would be about €24
billion invested in the improvement our homes and offices, providing a better
competitive edge of our industries and creating local employment.

3.           Staff Working Documents
with more detailed guidance on the EED provisions

The majority of the EED provisions must be
transposed into national law by 5 June 2014. For Article 7 the Member States
must send their planned policy measures to the Commission by 5 December 2013. Member
States' use of the alternative approach in Article 5(6) and exemptions to the
requirements of Article 14(5) must be notified to the Commission by 31 December
2013.

As energy efficiency relies on multiple
small-scale actions, the Energy Efficiency Directive contains complex, detailed
provisions often of a very technical character. The Commission is concerned to
work closely with the Member States in their transposition and effective
implementation of the Directive, and to this end, has prepared seven Staff Working
Documents (SWDs), which explain in more detail how, in the Commission's services'
view, certain provisions of the Directive should be read and can be best
applied. These SWDs do not alter the legal effects of
the Directive and are without prejudice to the binding interpretation of the
Directive as provided by the Court of Justice. The documents
deal with subjects in the Directive which are legally complex, demanding to
transpose and have high potential in terms of impact on energy efficiency. They
concern Articles 5 – 11, 14 and 15 of the EED, which include provisions on
central government buildings, public procurement, energy efficiency obligations
and alternatives, energy audits, metering and billing, co-generation and grids
and demand response. It should be noted that the EED contains minimum
requirements and that, in accordance with Article 1(2), the Member States can
introduce more stringent measures compatible with Union law.

The detailed SWDs will be linked to this
Communication and a short summary of the main issues is given below.

As the full transposition of the EED into
national legal orders requires long term planning, the Commission is publishing
this Communication and accompanying SWDs in advance of the Directive's
transposition deadline.

3.1.        Guidance on Article 5
(Exemplary role of central government buildings)

Article 5 requires that central governments
of Member States renovate each year 3% of the total floor area of the buildings
they own and occupy that do not meet the minimum efficiency requirements set
under the Energy Performance of Buildings Directive 2010/31/EC to at least the
efficiency levels that they set in application of that Directive. Member States
must establish and make publicly available an inventory of all relevant central
government buildings by 31 December 2013. If a Member State renovates more than
3% of the total floor area of central government buildings, it can count this
towards its obligations in any of the three previous or three following years. As
an alternative to the requirement to renovate 3% of the floor space of central
government buildings, Member States may take other cost-effective measures that
would achieve at least an equivalent level of energy savings within their
central government buildings. The amount of energy savings required under the
alternative approach is cumulative, meaning that Member States are required to
achieve the sum of annual energy savings over the whole period between 2014 and
2020, irrespective of the savings achieved in each individual year during that
period. Member States may use estimates for establishing the required level of
savings.

For determining the scope of the obligation
under Article 5, the definition of "central government" provided in
Article 2(9) of the EED is crucial. 'Central government' means 'all
administrative departments whose competence extends over the whole territory of
a Member State'. Further to this definition Member States might refer to Annex
IV of the Public Procurement Directive[12],
which includes a list of central government bodies in all Member States, as
well as to the definition of central government contained in the Guidance to
Council Regulation 479/2009/EC on the application of the Protocol on the
excessive deficit procedure. For Member States with federal structure the last
sentence of recital 17 of the EED is relevant.

The SWD on Article 5 provides possible
criteria and references for establishing which buildings fall within the scope
of the obligation. It also gives practical examples of how the 3% refurbishment
target and the obligation under the alternative approach could be established
and met.

3.2.        Guidance on Article 6
(Purchasing by public bodies)

The Public Procurement Directive 2004/18/EC
sets the framework on procurement and aims at ensuring principles such as fair
competition and getting best value for taxpayers’ money. It leaves to specific
legislation, such as the EED, any definition of what has to be purchased. Article
6 of the EED requires, under certain conditions, that central governments
purchase products, services and buildings with high energy-efficiency
performance defined through EU legislative acts, such as the Energy Labelling
Directive[13]
and supplementing delegated regulations, the Eco Design Directive[14] and its implementing
regulations, the Energy Performance of Buildings Directive or the Energy Star
Programme. Annex III of the EED sets out a list of energy efficiency
requirements defined in these EU acts.

The SWD clarifies relevant provisions of
the EU acts referred to in Annex III in relation to public procurement. Also
here the definition of "central government" is crucial for
determining the scope of public procurement obligations.

The public procurement obligation is
conditional on elements such as cost-effectiveness, technical suitability and
wider sustainability. The SWD explains these "conditionalities", for
example the difference between life-cycle cost-effectiveness and economical
feasibility, and in what circumstances Member States could apply them. It also
provides possible criteria on the basis of which Member States could establish
which entities are covered by the public procurement obligations.

3.3.        Guidance on Article 7
(Energy efficiency obligations and alternatives)

Article 7 is responsible for half the
energy savings the EED should achieve. It is complex and some provisions[15] should start to apply before
the end of the EED transposition period. .

The Article requires Member States to
establish energy efficiency obligation schemes or use alternative policy
measures to achieve a certain targeted amount of energy savings amongst final
consumers. The energy savings to be achieved by energy efficiency obligation
schemes and alternative measures under paragraph 9 must be at least equivalent
to achieving new savings each year from 1 January 2014 to 31 December 2020 of
1.5% of the annual energy sales to final consumers of all energy distributors
or all retail energy sales companies by volume averaged over 2010, 2011 and
2012. The SWD explains how this overall targeted amount of cumulative and new
energy savings to be achieved over the 2014-2020 obligation period should be
calculated, and clarifies which statistical datasets could be used.
Furthermore, this amount can be reduced by Member States by up to 25% using
four specific possibilities, namely using lower savings rates, partially or
fully excluding ETS industries, allowing certain supply side savings or
counting energy savings from early action since 31 December 2008 that still
deliver an impact in 2020. The SWD explains how these possibilities set out in
Article 7(2) could be used.

The SWD gives examples of the types of
policy measures and the energy savings resulting from them that can be taken
into account. It also draws attention to the methods and principles set out in
Annex V to the EED which need to be followed in the calculation of energy
savings.

As "new" savings are required,
not everything that Member States have done at any time in the field of end-use
energy efficiency can count for the purposes of Article 7. The SWD explains
that energy savings obtained from individual actions within the obligation
period (i.e. from 1 January 2014 to 31 December 2020) can be counted,
even if the policy measure that gave rise to the actions was adopted/introduced
before 1 January 2014. In terms of transposition and implementation, by 5
December 2013 the Member States must notify to the Commission their detailed
planned, proposed or legally defined methodology for the operation of their
energy efficiency obligation scheme, as well as the policy measures they plan
as alternative measures.

It should be recalled that Member States
are required to lay down rules on effective, proportionate and dissuasive
penalties applicable in case of non-compliance with the national provisions
adopted under this Article (Article 13 EED).

3.4.        Guidance on Article 8
(Energy Audits and Energy Management Systems)

Article 8 imposes two main obligations upon
Member States: to promote the availability of energy audits among final
customers in all sectors and to ensure that enterprises that are not SMEs carry
out energy audits at least every four years. Audits must be cost-effective and
undertaken by qualified/accredited experts or supervised by independent
authorities.

The EED defines "SMEs" by
reference to Commission Recommendation 2003/361/EC and the SWD explains the
elements of the definition as set out in the Recommendation (fewer than 250 employees,
annual turnover not exceeding EUR 50 million, and/or an annual balance sheet
total not exceeding EUR 43 million). National labour rules apply as regards the
definition of 'employees'. The SWD explains that under the EU definition, an
enterprise in one country needs to determine whether it is a partner or linked
to an enterprise in another country. This will be the case if an enterprise
holds over 25% of capital or voting rights in another enterprise[16] (or vice versa) and in this case
the total number of employees of the partner or linked companies must be looked
at to see if the enterprises are SMEs or not.

Applying this definition in practice
requires for instance the consideration of consolidated data concerning each
enterprise, including in other Member States and outside Europe, in order to
ensure a harmonised definition and treatment across the EU. The SWD gives
examples of measures, such as registers of SMEs, public registries of companies
by size, etc., which could be useful in identifying which enterprises fall
under the energy audit obligation.

As a result, small branches in one Member State may need to carry out an energy audit every four years because they do not
fall within the definition of SME and therefore come within the category of
large enterprises. This should not be considered as an extra burden or
disproportionate[17]
because on the one hand such enterprises may well be implementing energy
management systems and therefore be exempted from the audit obligation or may have
arrangements whereby the branch could be helped with the audit, for example by
in house experts from the parent company; and on the other hand, because the
energy audit in question is likely to have a more limited scope and cost.

The SWD explains the flexibility provided
in Article 8 for the fulfilment of the audit obligation. Accordingly, large
enterprises that implement energy or environmental management systems are
exempt from the requirement of energy audits every four years. Large
enterprises implementing energy audits under voluntary agreements (with
adequate supervision) are considered to fulfil the regular energy audit
requirement.

For the purpose of guaranteeing the high
quality of energy audits and energy management systems, Member States must
establish minimum requirements for energy audits based on Annex VI of the EED,
and the SWD gives practical examples of the level of detail an energy audit
should include. The guidance note also explains how the EED audit systems
relate to accreditation and conformity assessment as governed by Regulation
(EC) No. 765/2008.

It should be recalled that, as with Article
7, Member States are required to lay down rules on penalties applicable in case
of non-compliance with the national provisions adopted for energy audits.

3.5.        Guidance on Articles 9-11
(Metering and billing information)

Article 9 requires that final customers for
electricity, natural gas, district heating, district cooling and hot water
should have a competitively priced individual meter that accurately reflects
their energy consumption and provides information on the time of their energy
use (with exceptions based on technical and financial grounds). The provisions
of the EED on metering and billing information take over and make more
effective some of the provisions of the earlier Directive 2006/32/EC on energy
end-use efficiency and energy services (most of which will be repealed by the
EED on 5 June 2014). From 31 December 2016, the requirement for the provision
of individual consumption meters to final customers of heating and cooling will
extend to multi-apartment and multi-purpose buildings with a central
heating/cooling source or supplied from a central source serving multiple
buildings (with exceptions based on technical and financial grounds).

The guidance note makes it clear that Article
9 does not require the introduction of smart metering systems (this is dealt
with in the Third Package Directives: 2009/72/EC and 2009/73/EC), but rather clarifies
that if Member States introduce smart metering, various obligations then apply
under Article 9(2), such as that the smart meters must be able to measure
electricity supplied to the grid from the customer's premises. It also sets out
the assessment that "final customer" could include not just the
person who uses the energy but also a person or organisation such as
cooperative of owners in a multi-apartment building, which collectively buys
energy. Article 10 requires that final customers with traditional individual
meters should normally be told at least every 6 months how much they will be
billed for the energy they used in the last period – every 3 months if they ask
for it or are billed electronically.

Where smart electricity/gas meters are
available, Article 10 gives final customers a right to detailed information on
their energy consumption under their present supply contract for the previous
two years and (with exceptions) to a comparison with the consumption of a
typical user.

Article 11 gives a right for final
customers to receive bills and billing information for their energy consumption
free of charge.

It should be recalled that Member States
are required to lay down rules on effective, proportionate and dissuasive
penalties applicable in case of non-compliance with the national provisions
adopted pursuant to Articles 9 to 11 (Article 13 EED).

3.6.        Guidance on Article 14
(Promotion of efficiency in heating and cooling)

Article 14 extends the scope and replaces
the substantive provisions of Directive 2004/8/EC on the promotion of cogeneration.
The guidance concerns only the new aspects introduced by the EED.

Member States are required to prepare a
comprehensive assessment to identify the cost-effective potential of
high-efficiency cogeneration and efficient district heating and cooling, taking
into account climate conditions, economic feasibility and technical suitability.
This assessment must be notified to the Commission by 31 December 2015. Based
on the identified potential, Member States should take measures to implement
the cost-effective potential of high-efficient cogeneration and efficient
district heating and cooling. In the assessment Member States should provide
information on the measures, strategies and policies that may be adopted to
achieve the potential for high-efficiency cogeneration up to 2020 and 2030. For
electricity generation and industrial installations above 20 MW there is an
obligation to prepare a cost-benefit analysis on the viability of cogeneration,
waste heat recovery or district heat network connection when they are built or
substantially refurbished. Results of the cost-benefit analysis should be
reflected in the authorisations or permits of the installations.

The requirements for the content of the
comprehensive assessment and for the methodology of the cost-benefit analysis
and the possible exemptions to the obligations for installations are explained
in detail in the SWD.

3.7.        Guidance on Article 15
(Energy transformation, transmission and distribution)

Article 15 requires that Member States
ensure that national energy regulatory authorities, TSOs and DSOs maximise the
energy efficiency potential of smart grids, assess and improve energy
efficiency in the design and operation of the gas and electricity
infrastructure and ensure that tariffs and regulations fulfil specific energy
efficiency criteria and do not hamper demand response. By 30 June 2015 Member
States must assess the energy efficiency potential of their gas and electricity
infrastructure and identify concrete measures to improve energy efficiency in
their network infrastructure. The Article provides for access and dispatch
priorities for combined heat and power (CHP) and puts demand side resources, in
particular demand response, on an equal footing with supply as regards
participation in wholesale and retail markets. It specifically promotes access
to and participation of demand response in balancing, reserve and other
services markets, requiring that the technical or contractual modalities for
participation be defined, including the participation of aggregators and other
demand response service providers.

4.           CONCLUSION

Energy efficiency is a complex and
demanding issue in terms of governmental capacity. Politically, there may be a
gap between the commitments made by Member States and delivery. The Energy
Efficiency Directive gives a new over-arching legal structure to the energy
efficiency objectives agreed at European level. To date, the implementation of
existing energy efficiency legislation is only partial. The EED replaces and
strengthens two energy efficiency Directives (2004/8/EC on cogeneration and
2006/32/EC on energy services) and links with the obligations already set out
in Directive 2009/125/EC on Ecodesign, Directive 2010/30/EU on energy labelling
and Directive 2010/31/EU on the energy performance of buildings). As mentioned
in part 2 above, the Commission must report to the European Parliament and
Council in 2014 on progress towards the 2020 target, and this assessment can
include proposals for further measures if necessary. It is hoped that this
Communication and the accompanying SWDs will help the Member States in their
transposition and implementation of the ambitious measures that they agreed in
the Energy Efficiency Directive.

[1]               Contrary to the two other targets, this target has
not been translated into legally binding instrument.

[2]               COM(2010) 2020 final.

[3]               Energy Efficiency Plan impact assessment (SEC/2011/277)

[4]               Directive 2012/27/EU of the European Parliament and
of the Council on Energy Efficiency, amending Directives 2009/125/EC (on the
setting of ecodesign requirements for energy-related products) and 2010/30/EU
(on labelling and standards for products) and repealing Directives 2004/8/EC
(on the promotion of cogeneration) and 2006/32/EC (on energy end-use efficiency
and energy services).

[5]               See Article 28(1).

[6]               Million tonnes of oil equivalent

[7]               Figures updated to take into account Croatia's accession to the EU on 1 July 2013

[8]               For a list of the national targets and an evaluation,
please see the Commission's Communication (COM (2013) final xxx) on "
Overall progress towards EU energy efficiency objectives"

[9]               In particular in COM(2013) 350 final and in the
Thematic fiche on EUROPE 2020 TARGETS: climate change and energy

[10]             For the two Member States (Slovenia and Croatia) that have not provided information on how their targets translate into primary and
final energy in 2020, the historic data on their energy use for 2010 was used
for the calculations (http://ec.europa.eu/energy/efficiency/eed/reporting_en.htm
).

[11]             Article 4 Directive 2010/31/EU

[12]             Directive 2004/18/EC

[13]             Directive 2010/30/EU

[14]             Directive 2009/125/EC

[15]             Article 7(9) & Annex V (4); Member States must
notify to the Commission by 5 December 2013 the policy measures they plan to
adopt

[16]             In general, most SMEs are autonomous since they
are either completely independent or have one or more minority partnerships
(each less than 25%) with other enterprises. If that holding rises to no more
than 50%, the relationship is deemed to be between partner enterprises.
Above that ceiling the enterprises are linked.

[17]             Annex VI(d) requires energy audits to be
'‘proportionate'‘. The principle of proportionality implies testing that a
legislative or administrative measure or means is appropriate and necessary in
order to reach or achieve a given goal or objective. The Court of Justice of
the European Union applies the proportionality principle when it balances
legislative measures against private interests, individual rights and
fundamental freedoms.